Novacea Reins In R&D

Novacea ( NOVC), a stock depleted since it halted a late-stage trial for its lead product in November, said Thursday that in order to preserve capital it will put the brakes on other clinical developments.

Specifically, it will discontinue its recently initiated clinical trial in acute lymphoblastic leukemia, delay a trial in B-cell lymphoma and scale back development of its second lead candidate, investigational anticancer prodrug AQ4N.

The South San Francisco-based biopharmaceutical company said it will not stop enrollment in an early-to-mid stage trial of AQ4N in patients with glioblastoma multiforme (GBM), an aggressive type of brain tumor.

Shares were trading down 4.7% at $2.85 Thursday. The stock has traded between $2.21 to $17.25 over the last year.

In November, Novacea's shares dropped 69% overnight when it ended its Ascent-2 late-stage trial of prostate cancer treatment candidate Asentar. A Data Safety Monitoring Board had observed more deaths in the Asentar arm of the trial. The company and co-developer Schering-Plough ( SGP) are still auditing the clinical sites of the study and analyzing data and said they will update investors later in 2008.

The company now projects a cash burn rate of $17 million to $19 million in 2008, which it says should be enough to support development of its above-mentioned AQ4N in GBM and its ongoing efforts with the Asentar analysis.

Stocks soar as the gross domestic product rises at an annualized rate of 3.5% in the third quarter and continuing jobless claims fall. Gregg Greenberg recaps the action in The Real Story video (above).